Gainesville Real Estate Attorney for Debt Settlements
If you are in debt that you cannot pay, you may be weighing several options to resolve your debt problem. Some homeowners decide to use the equity in their home to negotiate debt settlements with their creditors. Debt settlements can be an effective way to get out of debt for less than you owe to your creditors. However, before you begin the process of negotiating with your creditors and taking a second mortgage or equity line on your home, you should consult with a Gainesville real estate attorney.
Using the equity in your home to settle debt is a serious matter. Our Gainesville real estate attorney is also an experienced bankruptcy lawyer. Therefore, you receive a comprehensive approach to debt settlement when you choose our Gainesville law firm. Call (888) 316-2131 to schedule an appointment to discuss your debt settlement options.
How Does Debt Settlement Work?
Debt settlement is the process of negotiating with your creditors for a lower payoff of your debts. For instance, if you owe $10,000 on a credit card, you may work out an agreement with the creditor to pay 75% of that amount or $7,500 in full settlement of the debt. The $7,500 is a lump sum payment; therefore, before you begin negotiating debt settlements, you must have a ready source of money you can use to pay the debts.
When you use the equity in your home to engage in debt settlement, you must obtain a mortgage or equity line before you begin negotiating. You need to close on the loan and have the proceeds in the bank for a couple of reasons. First, you need to know exactly how much money you have available to work with so that you do not agree to pay more money than you have available in the bank. Second, you need to have immediate access to the funds to make the lump sum payments. Creditors who agree to a debt settlement typically require payment within a few days of the agreement.
Therefore, you need an Gainesville real estate attorney to handle the closing of the loan. The mortgage company will likely require a title search and an attorney to close the loan. By working with our office, you do not need two attorneys to help you with the debt settlement. Our attorneys can handle the real estate closing and negotiate with your creditors to settle your debt for less than you owe on the accounts.
Are There Risks in Using Your Home Equity for Debt Settlement?
Whenever you are accessing the equity in your home to pay debts, there are risks. Below are several of the issues you need to consider and discuss with an attorney before proceeding with a debt settlement:
- You are accessing the equity in your home to pay unsecured debts. A mortgage is a secured debt. While the credit card companies may not be able to take your home for non-payment, the mortgage company can foreclose if you fail to pay the mortgage payments. If you are struggling to pay your debts, adding a mortgage payment may not be the answer.
- Your creditors are not required to negotiate. You may have a few creditors that refuse to accept any amount to settle the debt other than the full amount owed on the account. Therefore, you could have a new mortgage payment and multiple credit card payments.
- There is no guarantee that you have enough money from the mortgage to pay all the creditors. If some creditors demand higher percentages to settle the debt, you could run out of money before settling all your debts.
- When you settle a debt for less than is owed on the account, the creditor reports the forgiven debt to the Internal Revenue Service (IRS). You may be required to report the amount of forgiven debt as income on your tax return. If so, you could owe more in taxes to the IRS.
Retaining experienced legal counsel to assist with the debt negotiation can be very beneficial. Your attorney understands the process for debt settlement and how to negotiate with creditors for the lowest payment possible to settle the debt in full.
Other Options for Debt Settlement
In addition to negotiating with your creditors to accept a lower amount to satisfy the debt in full, you may also have several other options for debt settlement. The benefit of hiring our firm is that we can offer you advice regarding bankruptcy and non-bankruptcy options for getting rid of debt. Exploring every option before deciding on the option that works best for your situation can help you get out of debt with the least amount of risk to your future.
Call an Gainesville Debt Settlement Attorney for More Information
If you need help with debt settlement, call (888) 316-2131 to discuss your financial situation with our Gainesville debt settlement lawyer.